What’s Aiding The Rally In Shrimp Stocks

The Waterbase Ltd., Avanti Feeds Ltd., and Apex Frozen Foods Ltd. have gained between 52 percent and 91 percent in the last three months. Apex Frozen Foods gained the most as it commenced operations at a new plant in Andhra Pradesh, which increased its shrimp processing capacity by three times to 29,240 metric tonnes per annum.

Avanti Feeds and Waterbase are shrimp-feed producers generating a majority of their revenue by selling them, while Apex Frozen Foods exports the seafood.

Demand and prices of Indian shrimp in the U.S.—its key market—has been steadily increasing after a decline in the beginning of 2019. Export volumes to the U.S. rose to a record 32 million kilograms in October, the latest month for which data is available.

Prices of Indian shrimp in the U.S. market have recovered nearly 10 percent from its recent lows to $8.7 per kg.

The rise in prices was on the back of moderation in shrimp supply globally, which augurs well for the entire shrimp chain as exporters and farmers will fetch better realisation and feed manufacturers can raise prices, according to ICICI Securities.

The three companies had indicated, in their commentaries for the quarter ended December, improved demand and prices.

All of this points to a better second half of FY20 for the companies as they reported strong numbers in the first half despite a weak preceding year. Falling prices of the seafood in FY19 led to a drop in shrimp farming, with rising raw material costs impacting the companies’ operating performance.